I recently read ‘The Long Tail’ by Chris Anderson in which he outlines the new ‘niche’ economy. It’s definately worth a read – because the basic principle is important. Put simply:

• The old material economy puts a premium on physical space – hence it’s all geared to creating ‘hits’ and selling large volumes of a limited range of things (movies, products, services etc).

• The new digital economy does away with the constraints of physical space and connects niche buyers with niche products, enabling a market for niche products. These technologies are able to capitalise the fact that there is greater overall volume of ‘stuff’ in the tail than in the peak.

This new economy, Anderson says, is shaped by 3 key forces:

1) The aggregators (those who bring together lots of virtual, niche, stock – like Amazon

2) The connectors (those who connect niche markets to niche products) – like Google and

3) The niche content producers.

What I find interesting is that in this model, the aggregators and the connectors win because they’re fed by an endless stream of content / product from niche producers in pursuit of good old-fashioned ‘hit’ status.

This is the main contradiction in the book for me. The examples that Anderson cites of niche content producers benefiting are in fact, the opposite. They’re niche content producers using social media (like YouTube and blogging) to infiltrate – guess what? – the mainstream ‘hit’ economy. Their motivation? To become mainstream, to sell mainstream and to make money mainstream.

That for me is the weakness of this dream of ‘win-win-win’ techno utopia. Not only is this argument inherently slanted towards digital content (where do toilet rolls fit in?), it claims a paradigm shift which, on very mild inspection, turns out to be rather more like ‘paradigm-as-usual’.

I’m reading (ok, a year late I hear you scream) Chris Anderson’s ‘The Long Tail’. The kind of book you know will be important to you but don’t quite know why.

To summarise: the internet revolutionises content production, content distribution and the way searchers are connected with that content. The result is that the totality of ‘niche’ markets (previously commercially unviable) is now greater than the mainstream markets. In short, if you’re Amazon, you’ll soon be making more money selling fewer units of an infinitely larger range of things – driven by the following 3 forces:

The sensible internet entrepreneur will be writing software tools for bloggers, podcasters, designers and musicians to produce more content. Or he’ll be developing new and better aggregators (like iTunes or Amazon) to bring more content together. Or she’ll be developing search algorithms, systems for recommendation, social media platforms and viral systems to bring consumers to that content.

But what she won’t be doing is actually creating content – unless she can create a huge volume of it.

The ‘Long Tail’ needs content but for the individual producer, content production isn’t profitable. So where does most of the content that fuels software development, aggregator design and search engine profitability come from? Paradoxically, from people striving for the kind of media superstardom and successthat characterised the old model.

And the best way to stimulate that production? By continuing to sell a myth of ‘consumer-as-producer’ to a generation striving for media superstardom – a myth so powerful and seductive that Anderson himself uses it without even noticing the inherent contradiction in the sentence.